"The question we ask today is not whether our government is too big or too small, but whether it works — whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified."
– President Barack Obama, Inauguration, 1/20/09
I know that lots of companies use their contacts within Government to either obtain cushy contracts or to lobby up government regulations to act as razor wire against their competition instead of competing in the open market. In this case, we sadly see our Govt acting in a similar manner – if it can’t compete, get other governments to hide its failure (emphasis mine):
Treasury Secretary Timothy Geithner has told a conference of international bankers that the rest of the world, notably countries in Asia and Europe, should join the United States in increasing regulations on their financial markets in the wake of the 2008 global financial crisis.
If such countries did not follow the U.S. government’s lead, Geithner indicated, then U.S. firms could move their business abroad or take advantage of different regulatory regimes in order to make a profit.
“We are committed to building a more level playing field internationally, as we move ahead with reforms in the United States,” Geithner told the International Monetary Conference in Atlanta, Georgia Monday. “We don’t want to see another race to the bottom around the world. As we act to contain risk in the U.S., we want to minimize the chances that it simply moves to other markets around the world.”
In essence, it is a case of getting other countries to raise barriers to the low cost "producers" – in this case, countries that can produce the desired services at much lower costs (which translates to lower costs -> taxes). This is simple economics. Why SHOULDN’T a company move to where it’s costs are lower so it can return more profits to its owners? We see this all the time with the "50 laboratories of democracy" as they tinker with the tax and labor codes – lately with them all trying to attract companies to move to their states.
And yes, we see the big tax states (like California, New York, and Illinois) loosing their tax bases quickly and complaining that the "lower cost producers", their fellow states, are stealing their lunch companies. They consider it unfair and try all kinds of schemes to "level" the tax field (i.e., "we can’t compete so let’s use the Feds to force it to be legal", like Congressman Dick Durban (R-IL) is trying to do).
What "Turbo-Tax" Timmy is now acknowledging is that the US is no longer able (or willing) to constrain itself and compete (we have the highest corporate tax rate in the developed world and one of the most progressive income tax rates to boot). Just as in business where the low efficient producer is penalized in the market place because of the pricing of its goods or services, so to is the US now paying the price for being spendthrift, killing the golden goose, or both. Again, Obama has ignored the examples of what happens at the level of the "various States" as the US tries to compete at the level of "the various Countries".
Mr. Obama, pleading with other countries? This is not leading (either from the front or from behind). Instead, this is just plain "not working".
